project report on impact of recession in india 1

8/3/2019 Project Report on Impact of Recession in India 1

1/25

Project Report

On

Impact of Recession in India

Submitted to:Submitted by:Mrs. Kawaljeet KaurHarsimranjeet KaurRegd: 625241502

In the partial fulfillment of therequirement for the BBA degree course of


2/25

the Swami Satyanand College ofManagement & Technology.

INDEX

Introduction to recession

Definition of recession

Attributes of recession

Causes & Effects of recession

Stock Market & Recession

Recession & Politics

History of Recession

Current crisis in the US

Impact of recession in India

Consequences of US Recession

Conclusion

Bibliography


3/25

Acknowledgement

If words are considered to be sign of gratitude thenlet these words convey the very same.

I am highly indebted to lecturer Miss. Shveta, whohas provide me with the necessary information andalso for the support and her valuable suggestionsand comments on bringing out this report in thebest way possible.

I feel great pleasure to cordial thanks to all facultymembers of management department of SSCMT whosincerely supported me with the valuable insightsinto the completion of this project and I am thankfulto that power that always inspire me to take rightstep in the journey of success in my life.

Harsimranjeet Kaur


4/25

RECESSION

RECESSIONS ARE the result of reduction in the demand of products inthe global market. Recession can also be associated with falling pricesknown as deflation due to lack of demand of products. Again, it could bethe result of inflation or a combination of increasing prices and stagnanteconomic growth in the west.

Recession in the West, especially the United States, is a very bad news forour country. Our companies in India have most outsourcing deals from theUS. Even our exports to US have increased over the years. Exports forJanuary have declined by 22 per cent. There is a decline in theemployment market due to the recession in the West. There has been asignificant drop in the new hiring which is a cause of great concern for us.Some companies have laid off their employees and there have been cut in

promotions, compensation and perks of the employees. Companies in the

private sector and government sector are hesitant to take up new projects.And they are working on existing projects only. Projections indicate thatup to one crore persons could lose their jobs in the correct fiscal endingMarch. The one crore figure has been compiled by Federation of IndianExport Organizations (FIEO), which says that it has carried out anintensive survey. The textile, garment and handicraft industry are worse


5/25

affected. Together, they are going to lose four million jobs by April 2009,according to the FIEO survey. There has also been a decline in the touristinflow lately. The real estate has also a problem of tight liquiditysituations, where the developers are finding it hard to raise finances.

IT industries, financial sectors, real estate owners, car industry,investment banking and other industries as well are confronting heavyloss due to the fall down of global economy. Federation of Indianchambers of Commerce and Industry (FICCI) found that faced with theglobal recession, inventories industries like garment, gems, textiles,chemicals and jewellery had cut production by 10 per cent to 50 per cent.

Definition of recession

Recession is not to be confused with depression. Recession means a slowdown or slump or temporary collapse of a business activity. In its earlystage it can be controlled in a methodical manner. Experience helps toavert total collapse. Unchecked, it leads to severe depression. Depressionis a dead end. It is time to close shop completely. It is a total state ofirrevocable economic failure. When a country is doing well all round itsGross Domestic Product (GDP) is on the rise.

Overall economy is bullish; it is not only the stock exchanges that tellriches to rags stories but even small businesses. It all adds to the nationalexchequer. An economist is likely to give a detailed, comprehensivedefinition of recession. But for the layman who has been affected knows it

only one way-when he loses his job and has no money to pay his creditand loans. Recession is when the consumer faces foreclosure and the

banker comes knocking for his pound (or dollar) of flesh. Manycompanies and whole countries go bankrupt for want of liquid funds andcash flow for even daily requirements.


6/25

If you look at it from the point of view of a businessman, recession is atransitory phase. The Business Cycle Dating Committee of the NationalBureau of Economic Research has another definition. It profiles the

businesses that have peaked with their activity in one season and it falls

naturally in the next season. It regains its original position with new products or sales and continues to expand. This revival makes therecession a mild phase that large companies tolerate. As the fiscal positionrises, there is no reason to worry. Recession can last up to a year. When ithappens year after year then it is serious.

Are we facing a recession or not? Yes, for the simple reason that not onlyour neighbors but our friends are unemployed. There is less of business

talk and more billing worries. Transitory recessions are good for theeconomy, as it tends to stabilize the prices. It allows run away bullishcompanies to slow down and take stock. There is a saying, when itstough the tough get going. The weaker companies will not survive the

brief recession also. Stronger companies will pull through its resources.So when is it time to worry? When you are facing a foreclosure, when thechips are down and out and creditors file cases for recovery.

Firms face closures when they go through recession and are not able torecover from losses. If, at this time, they are not able to sustain their

prices and stocks then there is more trouble. Even when the recessionperiod gets over, they will not be able to do well. If a business survives arecession period they should be able to survive a depression. But howmany recession proof businesses are there? Who will eventually survivethe recession?

1. Those that have been able to save their funds.2. Those who have not invested in fly-by-night companies.3. Those who remain clam till the storm passes.4. Those that take stock immediately and decide to reinvest in a recession

proof business.


7/25

Identifying

In a 1975 New York Times article, economic statistician Julius Shiskinsuggested several rules of thumb to identify a recession; these includedthe rule of 'two successive quarterly declines in GDP. Over time, the otherrules have been largely forgotten, and a recession is now often identifiedas the reduction of a country's GDP (or negative real economic growth)for at least two quarters. Some economists prefer a more robust definition

of a 1.5% rise in unemployment within 12 months.In the United States the Business Cycle Dating Committee of the NationalBureau of Economic Research (NBER) is generally seen as the authorityfor dating US recessions. The NBER defines an economic recession as: "asignificant decline in [the] economic activity spread across the country,lasting more than a few months, normally visible in real GDP growth, real

personal income, employment (non-farm payrolls), industrial production,and wholesale-retail sales." Almost universally, academic economists,

policy makers, and businesses defer to the determination by the NBER forthe precise dating of a recession's onset and end.


8/25

Attributes

A recession has many attributes that can occur simultaneously and caninclude declines in coincident measures of activity such as employment,investment, and corporate profits.

A severe (GDP down by 10%) or prolonged (three or four years) recessionis referred to as an economic depression, although some argue that theircauses and cures can be different.

Causes of recessions

Currency crisis Energy crisis War Under consumption Overproduction Financial crisis Price of Fuels

Effects of recessions

Bankruptcies Credit crunches Deflation (or disinflation)


9/25

Foreclosures Unemployment

Stock market and recessions

Some recessions have been anticipated by stock market declines. InStocks for the Long Run, Siegel mentions that since 1948, ten recessionswere preceded by a stock market decline, by a lead time of 0 to 13 months(average 5.7 months), while ten stock market declines of greater than 10%in the DJIA were not followed by a recession.

The real-estate market also usually weakens before a recession. Howeverreal-estate declines can last much longer than recessions.

Since the business cycle is very hard to predict, Siegel argues that it is notpossible to take advantage of economic cycles for timing investments.Even the National Bureau of Economic Research (NBER) takes a fewmonths to determine if a peak or trough has occurred in the US.

During an economic decline, high yield stocks such as fast movingconsumer goods, pharmaceuticals, and tobacco tend to hold up better.However when the economy starts to recover and the bottom of themarket has passed (sometimes identified on charts as a MACD), growthstocks tend to recover faster. There is significant disagreement about howhealth care and utilities tend to recover. Diversifying one's portfolio into


10/25

international stocks may provide some safety; however, economies thatare closely correlated with that of the U.S. may also be affected by arecession in the U.S.

There is a view termed the halfway rule according to which investors startdiscounting an economic recovery about halfway through a recession. Inthe 16 U.S. recessions since 1919, the average length has been 13 months,although the recent recessions have been shorter. Thus if the 2008recession followed the average, the downturn in the stock market wouldhave bottomed around November 2008.

Recession and politics

Generally an administration gets credit or blame for the state of economyduring its time. This has caused disagreements about when a recessionactually started. In an economic cycle, a downturn can be considered aconsequence of an expansion reaching an unsustainable state, and is

corrected by a brief decline. Thus it is not easy to isolate the causes ofspecific phases of the cycle.

The 1981 recession is thought to have been caused by the tight-moneypolicy adopted by Paul Volcker, chairman of the Federal Reserve Board, before Ronald Reagan took office. Reagan supported that policy.Economist Walter Heller, chairman of the Council of Economic Advisersin the 1960s, said that "I call it a Reagan-Volcker-Carter recession. Theresulting taming of inflation did, however, set the stage for a robust

growth period during Reagan's administration.

It is generally assumed that government activity has some influence overthe presence or degree of a recession. Economists usually teach that tosome degree recession is unavoidable, and its causes are not wellunderstood. Consequently, modern government administrations attempt to


11/25

take steps, also not agreed upon, to soften a recession. They are oftenunsuccessful, at least at preventing a recession, and it is difficult toestablish whether they actually made it less severe or longer lasting.

History of recessions

Global recessions

There is no commonly accepted definition of a global recession, IMF

regards periods when global growth is less than 3% to be globalrecessions. The IMF estimates that global recessions seem to occur over acycle lasting between 8 and 10 years. During what the IMF terms the pastthree global recessions of the last three decades, global per capita outputgrowth was zero or negative.

Economists at the International Monetary Fund (IMF) state that a globalrecession would take a slowdown in global growth to three percent orless. By this measure, three periods since 1985 qualify: 1990-1993, 1998

and 2001-2002.

According to economists, since 1854, the U.S. has encountered 32 cyclesof expansions and contractions, with an average of 17 months ofcontraction and 38 months of expansion. However, since 1980 there have


12/25

been only eight periods of negative economic growth over one fiscalquarter or more, and four periods considered recessions:

January-July 1980 and July 1981-November 1982: 2 years total July 1990-March 1991: 8 months March 2001-November 2001: 8 months December 2007-current: 15 months as of March 2009

From 1991 to 2000, the U.S. experienced 37 quarters of economicexpansion, the longest period of expansion on record.

For the past three recessions, the NBER decision has approximatelyconformed to the definition involving two consecutive quarters of decline.However the 2001 recession did not involve two consecutive quarters of

decline, it was preceded by two quarters of alternating decline and weakgrowth.

Current recession in some countries

Official economic data shows that a substantial number of nations are in

recession as of early 2009. The US entered a recession at the end of 2007,and 2008 saw many other nations follow suit. United States

The United States housing market correction (a consequence of UnitedStates housing bubbles) and sub prime mortgage crisis has significantlycontributed to a recession.

The 2008/2009 recession is seeing private consumption fall for the firsttime in nearly 20 years. This indicates the depth and severity of the

current recession. With consumer confidence so low, recovery will take along time. Consumers in the U.S. have been hard hit by the currentrecession, with the value of their houses dropping and their pensionsavings decimated on the stock market. Not only have consumers watchedtheir wealth being eroded they are now fearing for their jobs asunemployment rises.


13/25

U.S. employers shed 63,000 jobs in February 2008, the most in five years.Former Federal Reserve chairman Alan Greenspan said on April 6, 2008that "There is more than a 50 percent chance the United States could gointo recession.". On October 1, the Bureau of Economic Analysis reportedthat an additional 156,000 jobs had been lost in September. On April 29,

2008, nine US states were declared by Moody's to be in a recession. InNovember 2008 Employers eliminated 533,000 jobs, the largest singlemonth loss in 34 years. For 2008, an estimated 2.6 million U.S. jobs wereeliminated.

Although the US Economy grew in the first quarter by 1%, by June 2008some analysts stated that due to a protracted credit crisis and "rampantinflation in commodities such as oil, food and steel", the country wasnonetheless in a recession. The third quarter of 2008 brought on a GDP

retraction of 0.5% the biggest decline since 2001. The 6.4% decline inspending during Q3 on non-durable goods, like clothing and food, was thelargest since 1950. A Nov 17, 2008 report from the Federal Reserve Bankof Philadelphia based on the survey of 51 forecasters suggested that therecession started in April 2008 and will last 14 months. They project realGDP declining at an annual rate of 2.9% in the fourth quarter and 1.1% inthe first quarter of 2009. These forecasts represent significant downwardrevisions from the forecasts of three months ago.

A December 1, 2008, report from the National Bureau of EconomicResearch stated that the U.S. has been in a recession since December2007 (when economic activity peaked), based on a number of measuresincluding job losses, declines in personal income, and declines in realGDP.

Other countries

A few other countries have seen the rate of growth of GDP decrease,generally attributed to reduced liquidity, sector price inflation in food andenergy, and the U.S. slowdown. These include the United Kingdom,Canada, Japan, Australia, China, India, New Zealand and the Euro zone.In some, the recession has already been confirmed by experts, while


14/25

others are still waiting for the fourth quarter GDP growth data to showtwo consecutive quarters of negative growth. India along with China isexperiencing an economic slowdown but not a recession.

Current crisis in the US

The defaults on sub-prime mortgages (home loan defaults) have led to amajor crisis in the US. Sub-prime is a high risk debt offered to peoplewith poor credit worthiness or unstable incomes. Major Banks havelanded in trouble after people could not pay back loans.

The housing market soared on the back of easy availability of loans. Therealty sector boomed but could not sustain the momentum for long, and itcollapsed under the gargantuan weight of crippling loan defaults.Foreclosures spread like wildfire putting the US economy on shakyground. This, coupled with rising oil prices at $100 a barrel, slowed downthe growth of the economy.

Past recessions in the US


15/25

The US economy has suffered 10 recessions since the end of World WarII. The Great Depression in the United was an economic slowdown, from1930 to 1939. It was a decade of high unemployment, low profits, low

prices of goods, and high poverty.

The trade market was brought to a standstill, which consequently affectedthe world markets in the 1930s. Industries that suffered the most includedagriculture, mining, and logging.

In 1937, the American economy unexpectedly fell, lasting through mostof 1938. Production declined sharply, as did profits and employment.Unemployment jumped from 14.3 per cent in 1937 to 19.0 per cent in1938.

The US saw a recession during 1982-83 due to a tight monetary policy tocontrol inflation and sharp correction to overproduction of the previousdecade. This was followed by Black Monday in October 1987, when astock market collapse saw the Dow Jones Industrial Average plunge by22.6 per cent affecting the lives of millions of Americans.

The early 1990s saw a collapse of junk bonds and a financial crisis.

The US saw one of its biggest recessions in 2001, ending ten years ofgrowth, the longest expansion on record.

From March to November 2001, employment dropped by almost 1.7million. In the 1990-91 recessions, the GDP fell 1.5 per cent from its peak


16/25

in the second quarter of 1990. The 2001 recession saw a 0.6 per centdecline from the peak in the fourth quarter of 2000.

The dot-com burst hit the US economy and many developing countries as

well. The economy also suffered after the 9/11 attacks. In 2001, investors'wealth dwindled as technology stock prices crashed.

Impact of an American Recession on India

Indian companies have major outsourcing deals from the US. India'sexports to the US have also grown substantially over the years. The Indiaeconomy is likely to lose between 1 to 2 percentage points in GDP growthin the next fiscal year. Indian companies with big tickets deals in the US

would see their profit margins shrinking.

The worries for exporters will grow as rupee strengthens further againstthe dollar. But experts note that the long-term prospects for India arestable. A weak dollar could bring more foreign money to Indian markets.Oil may get cheaper brining down inflation. A recession could bring downoil prices to $70.

The whole of Asia would be hit by a recession as it depends on the USeconomy. Even though domestic demand and diversification of trade inthe Asian region will partly counter any drop in the US demand, one


17/25

simply can't escape a downturn in the world's largest economy. The USeconomy accounts for 30 per cent of the world's GDP.

Says Sudip Bandyopadhyay, director and CEO, Reliance Money: "In the

globalised world, complete decoupling is impossible. But India mayremain relatively less affected by adverse global events." In fact, manysmall and medium companies have already started developing trade tieswith China and European countries to ward off big losses.

Manish Sonthalia, head, equity, Motilal Oswal Securities, says if the USeconomy contracts much more than anticipated, the whole world's GDP

growth-which is estimated at 3.7 per cent by the IMF-will contract, andIndia would be no exception.

The only silver lining is that the recession will happen slowly, probably insix months or so. As of now, IT and IT-enabled services, textiles,

jewellery, handicrafts and leather segments will suffer losses because oftheir trade link. Certain sections of commodities could face sharp impactdue to the volatile nature of these sectors. C.J. George, managing director,Geojit Financial Services, says profits of lots of re-export firms may be

affected. Countries like China import commodities from India do somevalue-addition and then export them to the US.

The IT sector will be the worst hit as 75 per cent of its revenues comefrom the US. Low demand for services may force most Indian Fortune500 companies to slash their IT budgets. Zinnov Consulting, a researchand offshore advisory, says that besides companies from ITeS and BPO,automotive components will be affected.

During a full recession, US companies in health care, financial servicesand all consumers demand driven firms are likely to cut down on theirspending. Among other sectors, manufacturing and financial institutionsare moderately vulnerable. If the service sector takes a serious hit, Indiamay have to revise its GDP to about 8 to 8.5 per cent or even less.


18/25

Lokendra Tomar, senior vice-president, Integreon, a BPO firm, says theUS recession is likely to have a dual impact on the outsourcing industry.Appreciating rupee along with poor performance of US companies (lawfirms, investment banks and media houses) will affect the bottom line ofthe outsourcing industry. Small BPOs, which are operating at a net margin

of 7-8 per cent, will find it difficult to survive.

According to Dharmakirti Joshi, director and principal economist ofCRISIL, along and severe recession will seriously affect the portfolio andfixed investment flows. Corporates will also suffer from volatility inforeign exchange rates. The export sector will have to devise newstrategies to enhance productivity.

Consequences of US recession on India job market

Worst affected because of US recession will be the service industry ofIndia. Under service industries come BPO, KPO, IT, ITeS etc. Serviceindustry contributes about 52% to India's GDP growth. Now if that isgoing to get hurt then it will also hurt India's overall growth but very

slightly. India is not going to face a major impact due to US recession.People may say that there is going to be a huge job loss due to recession.and will cite the example of TCS firing about 500 employees but thesewere employees who didnt perform and for cost cutting one have toreduce Non performing asset and that exactly what has been done. Thereis no threat to the skilled people. According to NASSCOM India will havea shortage of about 5 million skilled people in IT/ITeS. So there are lots ofopportunities.

Apart from this India's travel, tourism and power industry is going togrow at a better rate. This is again a good sign. India has a huge

population so a huge consumer base so we dont have to always dependon US for our growth. India's GDP is expected to grow at the rate of 8.5-


19/25

8.9 % which is again way above the growth rate of US and only secondhighest in the world after China.

This recession gives us opportunity to be innovative and to think out ofbox so that the US directly doesnt affect our robust growth. Due toincreasing Rupee exporters are having a hard time but it has been notedthat our exporters are not that efficient and in past they got the benefit ofdepreciating rupee. So now its time to be innovative and more effectiveand increase the over all efficiency and go for systematic cost cutting to

balance the rupee effect. Infact there are lots of scope for improvement. InWest Africa goods at departmental stores are sold at the rate 5 times thanIndian price and Indian goods are not exported to several countries inWest Africa. Its an excellent opportunity for our exporters.

10 Indian industries to do well during recession

In the current global economic slowdown, every sector of business is being affected and is witnessing a hard time. But IKON Marketing

Consultants reports that in India there are few sectors which will grow inthis adverse situation.

AS EVERY business sector is affected by present global crisis andeverybody is talking of slow down in business, still in India there are fewsectors which will grow in this adverse situation. Lets have a look.

1. Food

No one can survive without basic food material like milk, vegetables anddrinking water. Food processing companies will not be affected much andrather will earn profits by increasing the prices. These are the basic needswhich we as a common man can not produce by our self.


20/25

According to Ministry of Food Processing Industry (MFPI), the foodprocessing industry in India was seeing growth even as the world wasfacing economic recession. According to the minister, the industry is

presently growing at 14 per cent against six to seven per cent growth in200304.The Indian food market is estimated at over US$ 182 billion and

accounts for about two thirds of the total Indian retail market. Further, theretail food sector in India is likely to grow from around US$ 70 billion in2008 to US$ 150 billion by 2025.

2. Railway

As the aviation sector has been affect much badly and resulting in sharp

rise in the air ticket rates the frequent travelers will prefer railways to cutthe cost of traveling and this will result in increased traffic in railways andlong queues at railway booking counters. The freight traffic of IndianRailways has continued to grow in the last few months, albeit at slow

pace, indicating only marginal impact of the global recession on theIndian economy.

The railways registered 13.87 per cent growth in revenue to Rs 57,863.90crore in the first nine months ended December 31, 2008. While total

earnings from freight increased by 14.53 per cent at Rs 39,085.22 croreduring the period, passenger revenue earnings were up 11.81 per cent atRs 16,242.44 crore. The railways have enhanced freight revenue byincreasing its axle loading, improving customer services and adopting aninnovative pricing strategy.

3. PSU Banks

As seen in the private sector much of the job cuts due to global slowdown,its the public sector undertaking (PSU) banks which gained muchconfidence due to job safety and security. More and more people arelikely to turn towards government institutions, particularly banks in thequest for safety and security.


21/25

A report "Opportunities in Indian Banking Sector", by market researchcompany, RNCOS, forecasts that the Indian banking sector will grow at ahealthy compound annual growth rate (CAGR) of around 23.3 per cent till2011.

4. Education

As education is considered as the basic necessity and in India it is seen asa long term investment by parents and with respect to the demand stillthere is a huge supply gap. The craze to study in foreign university amongthe Indian youth still alive which will prompt foreign education instituteto target India provided vast young population willing to join. We will see

more and more foreign educational institutions coming up in India inrecent coming years.

Huge government as well as private investment is likely to flow into theIndian educational system. D E Shaw, a US$ 36 billion, global privateequity firm is planning to invest around US$ 200 million in the Indianeducation sector.

5. Telecom

People will not stop to communicate with each other due to global crisesrather it has been seen that it will increase much particularly with mobilecommunication. With cheap cell phones available in the Indian marketand cheaper call rates, the sector has become the necessity and primaryneed of everyday life.

Telecom sector, according to industry estimates, year 2008 started with asubscriber base of 228 million and will likely to end with a subscriber

base of 332 million a full century. The telecom industry expects to addat least another 90 million subscribers in 2009 despite of recession. TheIndian telecommunications industry is one of the fastest growing in the


22/25

world and India is projected to become the second largest telecom marketglobally by 2010.

6. IT

Recent news shown that Indian IT sector will grow 30 to 40 per cent nextyear. And on the other side to survive in current slowdown, industrieshave to decrease the cost and for that they will resort to customised ITsolutions which will further boost up the software solution demand.

India is fast becoming a hot destination for outsourced e-publishing work.As per a Confederation of Indian Industry (CII) report, the industry isgrowing at an annual rate of 35 per cent and Indias outsourcingopportunities in the value-added and core services such as copy editing,

project management, indexing, media services and content deploymentwill help make the publishing BPO industry worth US$ 1.46 billion by2010.

7. Health care

India in case of health care facilities still lakes the adequate supply. Inhealth care sector also there is huge gap between demand and supply at allthe levels of society. Still there are so many urban areas were you couldhardly find any multi specialty hospital. And in case of metros the marketsentiments itself created a need of psychological consultation.

Healthcare, which is a US$ 35 billion industry in India, is expected toreach over US$ 75 billion by 2012 and US$ 150 billion by 2017. The

healthcare industry is interestingly poised as it strives to emerge as aglobal hub due to the distinct advantages it enjoys in clinical excellenceand low costs.

8. Luxury products


23/25

The high and affluent class of society will not be affected much by thisglobal crises even if their worth is reduced significantly. They will notchange their lifestyle and will not stop spending on luxurious goods. Soluxurious product market will not be affected and in fact to maintain thelifestyle those affluent will spend more for it. Luxury car makers are

pouring in to woo the nouveau riche (Audi, BMW are the most recententrants).

9. M&A & Marketing Consultants

As in the current business slow down survival will be the main focus, themarketing and management consultants will be called for to reduce the

costs and to show the ways to survive and stay in market. Others may joinhands to fight with this situation together will call for the Marketing &M&A consultants. In a booming market there are growth strategies andM&A opportunities to advise on. When businesses are cutting back,consultancies will be right there to help clients decide where to wield theaxe.

According to Ministry of Commerce and Industrys estimation, thecurrent size of consulting industry in India is about Rs 10000 crores

including exports and is expected to grow further at a CAGR ofaproximately 25 per cent in next few years.

10. Media and Entertainment

In current bad times, where people are losing jobs and getting enoughtime to watch TV, they will seek entertainment at home and hence

advertising revenues will increase for the commercial channels. Also businesses like production of religious texts and religious materials,religious channels will do well. The TRP of religious channels willincrease compare to the other entertaining/commercial channels.


24/25

According to a report published by the Federation of Indian Chambers ofCommerce and Industry (FICCI), the Indian M&E industry is expected togrow at a compound annual growth rate (CAGR) of 18 per cent to reachUS$ 23.81 billion by 2012. According to the PWC report, the televisionindustry was worth US$ 5. 48 billion in 2007, recording a growth of 18

per cent over 2006. It is further likely to grow by 22 per cent over the nextfive years and be worth US$ 12. 34 billion by 2012.

Conclusion

Over the past couple of months, fears of a slowdown in the United States

of America have increased. The impact of the sub prime crisis along witha slowdown in mortgages has led to a significant lowering of growthestimates. Since the United States dominates the global economy, anyslowdown there would have an impact on most of the global economicvariables.

For India, it could mean a further appreciation in the rupee Vis--Vis theUS dollar and a darkening of business outlook for sectors dependent on

US companies. The overall impact of a US slowdown on India would,however, be minimal as the factors driving growth here are more local innature. Unlike the rest of Asia, India is a strong domestic demand story, soany slowing in the US is likely to have a more muted impact on India.Strong growth in domestic consumption and significant spending oninfrastructure are the two pillars of Indias growth story. No sector has a


25/25

dominant influence on earnings growth and risks to our estimate arelimited. Corporate India is also learning to master the art of efficientcapital management, reduction in costs and delivery of value-addedservices to sustain profit margins. Further, interest rates are expected to bestable primarily due to control over inflation and proactive measures

undertaken by the RBI.

Bibliography

1. www.google.com

2. www.harvard.org

3. Wikipedia

project report on impact of recession in india 1

Documents